RXDC, INC. v. OIL, CHEM. & ATOMIC WKRS. U-IPF
| Decision Date | 29 January 1992 |
| Docket Number | Civ. A. No. 90-S-438. |
| Citation | 781 F. Supp. 1516 |
| Parties | RXDC, INC., formerly known as Rexall Corporation, Plaintiff, v. OIL, CHEMICAL AND ATOMIC WORKERS UNION-INDUSTRY PENSION FUND, a pension trust, and its present Trustee, Defendant. |
| Court | U.S. District Court — District of Colorado |
Richard Mandelson, Baker & Hostetler, Denver, Colo., Gary Ford, Washington, D.C., for plaintiff.
John McKendree, McKendree, Toll and Mares, Denver, Colo., Barbara Hillman, Cornfeld & Feldman, Chicago, Ill., for defendant.
THIS MATTER comes before the Court on cross-motions for summary judgment. Plaintiff's motion for summary judgment was filed August 31, 1990. The Defendant filed its response in opposition to Plaintiff's motion and brief in support of its cross-motion for summary judgment on October 23, 1990. Reply briefs and supplemental documents were also submitted. Also pending before this court is Defendant's motion for interim payment. This motion will be decided in conjunction with the disposition of the summary judgment motions.
This is an action to obtain judicial review of an arbitration award. Jurisdiction is proper under 29 U.S.C. § 1401(b)(2). The matter is before this Court as an action by the Plaintiff to set aside an arbitration award rendered in favor of the Defendant Fund, and assessing withdrawal liability against the Plaintiff in excess of $3.6 million. Jurisdiction is proper under § 4221 of the Employee Retirement Income Security Act (ERISA), and as amended by the Multiemployer Pension Plan Amendments Act (MPPAA), 29 U.S.C. § 1401(b)(2). The basis of this dispute arises from the statutory scheme which governs the liability of an employer who withdraws from a multi-employer pension plan pursuant to MPPAA, 29 U.S.C. § 1401(b)(2). The Seventh Circuit has described this statutory scheme as follows:
MPPAA was enacted by Congress to cure the problems arising when one employer ceased making payments to a pension plan fund. When an employer ceased making such payments, the plan would be left with vested pension obligations which were only partially funded. MPPAA provides that an employer who withdraws from a pension plan covered under it becomes liable for an amount of money designed to cover the employer's share of vested, but unfunded, benefits. 29 U.S.C. § 1382 (citations omitted).
Robbins v. Lady Baltimore Foods, 868 F.2d 258, 261 (7th Cir.1989). The complaint alleges, at paragraph 9, that Rexall II did not assume the collective bargaining agreement between Rexall I and the Oil, Chemical and Atomic Workers (OCAW) local union, but did comply with the terms and conditions of the 1975 collective bargaining agreement (including the obligation to contribute to the pension fund) through May 11, 1977, and also that the Fund had advised Rexall II of its withdrawal liability in the amount of $3,661,400. The complaint also states, at paragraph 16, that the information furnished Plaintiff by the Fund indicated that the Fund had calculated the amount of Rexall II's liability as if Rexall II and Rexall I had been the same corporate entity. Finally, the complaint seeks to set aside the factual findings of the arbitrator as erroneous and rebutted by a clear preponderance of the evidence, as well as the conclusions of law as erroneous and contrary to law. Plaintiff requests the Court to reverse, vacate, or modify the award, to invalidate any withdrawal liability assessment against Rexall II, and grant Plaintiff its attorney's fees.
As the facts are stipulated by the parties, this matter can be disposed of by summary judgment. Only questions of law remain to be determined by this Court.
The events leading up to the arbitration on the withdrawal liability assessment can be summarized as follows. Rexall I operated a drug manufacturing plant in St. Louis, Missouri, until January 7, 1977. At that time Rexall I's manufacturing plant, the right to use the name "Rexall Drug," as well as other assets, were purchased by a newly formed corporation known as Rexall II. Rexall II assumed the terms and condition of the collective bargaining agreement between Rexall I and the Oil, Chemical and Atomic Workers (OCAW) Local 5-136 which had been in force since 1970.
The agreement in effect on January 7, 1977 was assumed by Rexall II with no modifications or changes. Rexall II was a successor employer within the meaning of the Labor Management Relations Act, and the collective bargaining agreement in effect on January 7, 1977 and successor collective bargaining agreements provided that Rexall II make contributions to Defendant pension plan. On January 7, 1977, Rexall II notified the OCAW local of the change in ownership of Rexall Drug. However, the pension plan was not made aware of the asset purchase agreement prior to Rexall II's objections to the pension plan's demand for payment of the withdrawal liability.
The stipulated facts also state that the asset purchase agreement between Rexall I and Rexall II was a bona fide, arm's length sale of assets to an unrelated party, within the meaning of § 4204 of ERISA.
Rexall I and Rexall II made all contributions to the pension plan as required by the terms of the applicable collective bargaining agreement. Effective December 31, 1985, Rexall II closed its plant and warehouse facilities, and ceased owing any obligation under the collective bargaining agreement to make pension plan contributions. On that same date, there was a complete withdrawal by Rexall II for the purposes of MPPAA.
The parties here have submitted stipulated facts and agree that the salient issues in this action concern questions of law, including which standard of review is appropriate. However, the parties disagree substantially on the content and nature of those legal issues.
Congress enacted ERISA "to ensure that employees and their beneficiaries would not be deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 720, 104 S.Ct. 2709, 2713, 81 L.Ed.2d 601 (1984). In response to the special problems experienced by multiemployer pension plans, Congress enacted the MPPAA in 1980 to correct the problem created by the withdrawal of employers from pension plans without payment of their share of the unfunded vested liability benefits (UVB's). MPPAA Id. at 725, 104 S.Ct. at 2715.
The MPPAA provides that when an employer withdraws from a multiemployer plan, the plan's beneficiaries must (1) determine the amount of liability (if any); (2) notify the employer of the liability; and (3) collect the liability. 29 U.S.C. § 1382. Under MPPAA, an employer becomes subject to withdrawal liability once it "permanently ceases to have an obligation to contribute" to a multiemployer pension fund. Trustees of the Colorado Pipe Industry Pension Trust v. Howard Electrical & Mechanical, Inc., hereafter referred to as Pipe Industry Fund 909 F.2d 1379, 1383 (10th Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 958, 112 L.Ed.2d 1046 (1991), citing 29 U.S.C. § 1383(a)(1). Pursuant to 29 U.S.C. § 1383, a complete withdrawal from a multiemployer plan occurs when an employer either permanently ceases to have an obligation to contribute under the plan, or permanently ceases all covered operations under the plan. As the Tenth Circuit noted in the Pipe Industry Fund decision at 1385, arbitration reigns supreme under the MPPAA (citation omitted). Any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination concerning withdrawal liability (under 29 U.S.C. §§ 1381-1399) shall initially be resolved through arbitration. The withdrawal liability determination is first made by the plan sponsor (29 U.S.C. §§ 1382, 1399(b)(1)), and upon that determination, the employer has ninety days to request a recalculation of the amount under 29 U.S.C. § 1399(b)(2). The employer may also seek arbitration of the assessment of withdrawal liability pursuant to 29 U.S.C. § 1401(a)(1), which the Plaintiff here obtained.
A remaining issue which is the subject of a separate motion is the Defendant's motion for interim payment. The particular provision applicable to this issue is found at 29 U.S.C. § 1399(c)(2). The Court will reserve its ruling on this motion until the motions for summary judgment are resolved.
The MPPAA provides a detailed discussion of both the subject and procedure of arbitration concerning a disputed assessment of withdrawal liability. At the arbitration level, 29 U.S.C. § 1401(a)(3) establishes two presumptions in favor of the plan sponsor (Defendant Fund here): that any determination made by the sponsor (pursuant to 29 U.S.C. §§ 1381-1399 and § 1405) is presumed correct unless the party contesting the determination show by a preponderance of the evidence that the determination was unreasonable or clearly erroneous; and that the determination of a plan's unfunded vested benefits (UVB's) for any plan year will be presumed correct unless a party contesting the determination shows by a preponderance of the evidence that the actuarial assumptions were unreasonable or that the actuary made a substantive error in applying the actuarial assumptions. See Withdrawal Liability Under the MPPAA, in ERISA: A Comprehensive Guide 331-32 (1991). In the case before this Court, post-arbitration litigation was commenced timely, and the arbitration record is before this Court for consideration.
The review by this Court of...
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...41 F.3d 1338 (9th Cir.1994), and this Court will do the same.4 See also RXDC, Inc. v. Oil, Chem. & Atomic Workers Union–Indus. Pension Fund, 781 F.Supp. 1516, 1522–23 (D.Colo.1992) (taking a similar approach).Before reviewing the arbitrator's conclusions, the Court must determine the approp......